Representing Preferences with a Unique Subjective State Space: A Corrigendum

Eddie Dekel, Barton L Lipman, Aldo Rustichini, Todd Sarver

Econometrica · 2007 · Volume 75 · Issue 2

DOI: 10.1111/j.1468-0262.2006.00759.x

Abstract

Dekel, Lipman and Rustichini (2001) (henceforth DLR) axiomatically characterized three representations of preferences that allow for a desire for flexibility and/or commitment. In one of these representations (ordinal expected utility), the independence axiom is stated in a weaker form than is necessary to obtain the representation; in another (additive expected utility), the continuity axiom is too weak. In this erratum we provide examples showing that the axioms used by DLR are not sufficient, and provide stronger versions of these axioms that, together with the other axioms used by DLR, are necessary and sufficient for these two representations.

Keywords

Subjective state space, expected utility, preference for commitment, preference for flexibility

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